On Monday this week there was a Reuters article that proclaimed: "US Treasury Secretary Timothy Geighner sought to ease fears the US was actively weakening the dollar to gain an export edge, saying no country could devalue its way to health".
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Talking about dollar devaluation: Geithner was quoted as saying "it's not going to happen in this country". He said: "dollar devaluation is not a viable strategy and we will not engage in it.". When he was asked if the dollar would lose its status as the world's reserve currency he replied "not in our lifetime."
When I read this article late Monday night I was tempted to send an email to several close friends and predict the gold price would tumble the next day. Sure enough, when I awoke early Tuesday, the gold price had indeed dropped nearly $40 and silver was down close to 70 cents. Gold took quite a thrashing on Tuesday and I thought "here we go again"... the PR machine is going to talk gold down and the dollar up, as we head into a "pre-meeting" of the G-20 this weekend, the US elections two weeks from now, and the official G-20 summit in 3 weeks.
But then on Wednesday the gold and silver price had rebounded somewhat and I read this article on Bloomberg: "For US Treasury Secretary Timothy Geithner, a weaker dollar may now be in the national interest." This article sang the praises of a declining dollar and how it could help shore up the US economy. It also stated that Geithner may now be tolerating a weaker dollar as a way of bolstering the economy.
Tak about muddying the waters so no one can understand what's good, what's bad, what Geithner supports, and what he doesn't. Actually, it's all irrelevant. Why? because regardless of what official policy is or isn't, the dollar has lost close to 98% of purchasing power over the past 97 years. Regardless of short term gyrations and political jawboning, the trend for the dollar is down. The trend for gold is up. Articles that proclaim Geithner is for a "strong dollar" while all his policies and those of the Fed support a dramatically weaker dollar, make no difference.
Why? because debts cannot be repaid. Politicians cannot fix the economy, regardless of who wins political office. You already know that worn out definition of insanity: doing the same thing over and over and expecting a different result each time. Switching political parties every 2, 4 or eight years is one of those definitions. It doesn't work. The average person is so confused by all the contradictory economic messages they are bombarded with each and every day, it becomes almost impossible for even the smartest person to form and hold any firm convictions about where the economy is headed and why. Fostering indecision and range of the moment thinking preserves the status quo. And don't forget, the status quo is a very profitable enterprise for the political and business leaders who perpetuate it. Unfortunately they do so at our expense.
Pension funds throughout middle America are going broke. Quantitative easing is setting up to drive inflation. If you thought people got squeezed in the collapse of 2008, just wait. In 2008 people began the process of losing their jobs, their retirement savings and their homes. Now, they have actually lost those things and there is nothing but hard pavement below. When the next Congressional, Fed and Treasury induced financial crisis slams the economy, there will be no soft landing, no managed decline, no extend and pretend. When that time arrives, we will get what we have been elusively promised for several years now. And that, is CHANGE.
